Nuclear Liability Bill becomes a liability

Neither the United States government nor its powerful business lobby is likely to embrace the Indian law, which imposes unprecedented liability on the suppliers for 80 years, says TP Sreenivasan

The United Nations and its committees are notorious for turning proposals brought before them into monstrosities that the proposers themselves are compelled to disown. The Nuclear Non-Proliferation Treaty and the Comprehensive Test Ban Treaty are good examples. India, which initiated these instruments, had to turn away from them when the end result turned out to be contrary to the original objectives.

More recently, the United States submitted a proposal to reform the Human Rights Commission to make it more effective, but ended up voting against the final version. These are extreme examples, but frequently consensus resolutions are adopted on the principle that "everyone is equally unhappy" about the result. But since many of those resolutions have no practical impact, they remain in the archives as relics of history.

When the Lok Sabha reached a rare consensus on the Nuclear Damages Liability Bill, it was obvious that it was a pyrrhic victory for the government. The declared objectives of the bill receded into the background and various other considerations determined the outcome and the government quietly declared success after trying a few tricks to slip in some clever words to retrieve lost ground. Those who could not defeat the India-US Nuclear Deal managed to secure their objective of making India-US nuclear trade difficult by appearing to collaborate with the government.

There was no doubt in anybody's mind that the first objective of the bill was to facilitate nuclear trade with private companies in the United States. The prime minister had assured the Americans that India would buy nuclear reactors from them and that necessary legislation would be enacted for the purpose. France and Russia too wanted their liabilities demarcated on the basis of the international norms, but they had not made it a precondition for their setting up nuclear reactors in India. They had, in any case, established in their bilateral contracts that there would be no liability for damage for the suppliers.

The second objective was to join the international liability regime not only to announce that India has come of age as a nuclear energy player, but also to benefit from the provisions in the Vienna Convention for international contribution to nuclear damage liability in certain circumstances. The original draft was, therefore, kept close to the provisions such as low caps on maximum liability in texts adopted by other countries.

The third objective was to prepare the ground for the Indian private sector to invest in nuclear energy production. The kind of figures envisaged, 45 GW by 2020, cannot be achieved in the public sector alone. The present provision for minority participation by the private sector is not particularly attractive for the private sector.

The first draft was greeted with alarm, derision and ridicule by a coalition of the left and the right, the ardent self-sufficiency advocates, romantic strategic thinkers and purist nuclear scientists, who saw an opportunity to reverse the nuclear deal. Human rights activists and eminent constitutional lawyers saw grave dangers to the constitutional principle of right to life. They even suggested that the bill would be struck down by the Supreme Court as unconstitutional. The non-proliferation Ayatollahs in the US predicted with glee that the bill would never pass and there would be no nuclear trade between the US and India. The remittance of the bill to a select committee of Parliament was more to save face rather than to secure a consensus.

The ghosts of a quarter century old Bhopal tragedy came to haunt the debate and even the revered memory of Rajiv Gandhi appeared to be in jeopardy. The main objective of the bill, the government declared, was to make sure that the mistakes of Bhopal should not be repeated and the select committee accepted 18 amendments, most of them contrary to the original objectives of the bill. Having given up important elements of the draft, the government clung hopelessly to international norms and Parliament's own earlier position that there should be no liability for suppliers. The linguistic callisthenics by the government to accomplish this caused even more suspicion and it had no choice but to join a consensus on a bill which did not meet the original objectives. It is the proverbial donkey created by a committee which set out to design a horse.

Neither the United States government nor its powerful business lobby is likely to embrace the Indian law, which imposes unprecedented liability on the suppliers for 80 years. It has been pointed out that each reactor may have hundreds of suppliers of components, some of whom would be so small that they cannot take on the liability running into millions. The answer to this, which was provided in Parliament, was that it is a buyer's market and that with the orders for 40 reactors in its pocket, India will be able to seduce foreign suppliers to take risks. And once the foreign suppliers come in, the Indian private sector will also become suppliers and operators, regardless of the liability.

The increase in the cap on the liability of the operator is a measure adopted on account of Bhopal emotions. In actual fact, whatever is the cap, it has no meaning, because the government will have to accept the liability whatever the damage is if, God forbid, there is a nuclear accident. The advantage of keeping the cap to the minimum level acceptable internationally was that the government did not have to incur huge expenses on insurance. The government could act as its own insurance and meet the liability if it arose. The inadequate compensation paid to the Bhopal victims was not on account of any liability cap, but decisions of the court. The government stepped in late in the day to rectify the situation.

The liability of the government in the event of disasters, whether natural or otherwise, is unlimited. One scientist suggested that the nuclear submarines should be brought under the purview of the liability bill. By that logic, nuclear weapons should also be brought in as an accident in military reactors cannot be ruled out. Absence of a liability law does not absolve the government of its responsibility to compensate victims.

In the process of the negotiations within the select committee and in Parliament itself, the government gave two assurances which are contrary to the original objectives. It said that it did not intend to join the Vienna Convention and that there would be no provision in the immediate future for the private sector to go it alone in the nuclear industry. This led to a consensus in the short term, but harmed the future of the nuclear industry.

The bill, yet to be adopted by the Rajya Sabha, may well become a case of declaring defeat as victory, unless the government has something up its sleeve, as some people suspect, to offer to foreign suppliers by way of framing rules authorised by the bill. But if foreign companies stick to their position that they will not enter the Indian market on the basis of an unsatisfactory liability regime, those who opposed the nuclear deal tooth and nail may have accomplished their mission by sweet reasonableness and consensus-building.

T P Sreenivasan is a former ambassador of India to the United Nations, Vienna, and a former Governor for India at the International Atomic Energy Agency, Vienna. He is currently the Director General, Kerala International Centre, Thiruvananthapuram, and a Member of the National Security Advisory Board